FedEx Battle Amazon For Freight Logistics

Supply Chain
Written By Rick Watson

One battle that I think is interesting is freight. Given the digital rise of B2B Commerce, did UPS and FedEx abandon ship too early?

  • FedEx is reported to be cutting back on its freight business by cutting off over 1,000 customers and then restoring it.

  • UPS sold its own freight business (but clearly did not cut off customers).

Meanwhile, Amazon is taking a page from its "DSP" (no, the other DSP - in this case, Delivery Service Partners) program which has 100k+ drivers delivering eCommerce parcels in middle-mile and last-mile. Amazon is building another new franchise business called Freight Service Partners.

Time will tell who is right here. UPS without an advertising and cloud business, cannot afford to be in something that is so low margin. For one. For two, Amazon controls the end-to-end, meaning there is so much B2B volume within its own network, it needs these partners to survive.

It can then leverage any excess capacity to lease that space to other shippers. Personally, I think UPS and FedEx cannot compete in this segment on the same footing as Amazon (UPS needed margins as a stand-alone business unit, Amazon does not), but how long until the same thing is true of their small parcel consumer business?

Rick Watson

Rick Watson founded RMW Commerce Consulting after spending 20+ years as a technology entrepreneur and operator exclusively in the eCommerce industry with companies like ChannelAdvisor, BarnesandNoble.com, Merchantry, and Pitney Bowes.

Watson’s work today is centered on supporting investors and management teams incubating and growing direct-to-consumer businesses. Most recently, in partnership with WHP Global, Rick was a critical resource in architecting the WHP+ platform, a new turnkey direct to consumer digital e-commerce platform that powers AnneKlein.com and JosephAbboud.com.

Watson also hosts a weekly podcast, Watson Weekly, where he shares an unbiased, unfiltered expert take on the retail sector’s biggest players.

In the past year alone, Rick has spoken at many in-person and virtual events as well as podcasts on topics ranging from retail/ecom to supply chain/logistics and even digital grocery including CommerceNext IRL, ASCM Connect, and Retail Innovation Conference.

https://www.rmwcommerce.com/
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